Systems for structured investment seeding

• US 8,645,247 B2
• Filed: 08/02/2011
• Issued: 02/04/2014
• Est. Priority Date: 01/06/2011
• Status: Active Grant

• Current Assignee: Bank of America Corp.
• Original Assignee: Bank of America Corp.
• Inventors: Olsson, David E.
• Primary Examiner(s): Ebersman, Bruce I
• Assistant Examiner(s): ANDERSON, JOHN A
• Application Number:
  US13/196,510
• Publication Number:
  US 20120179626A1
• Time in Patent Office: 917 Days
• Field of Search: 705/36
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

The disclosure provides an investment structure and corresponding arrangement which involves methods and systems whereby the asset manager directly or indirectly makes a seed investment in the new fund and hedges its risk, while obtaining financing on its investment. Additionally, in another embodiment, the financial institution or asset manager may actually make an investment into the fund and hedge itself by trading with the fund. The financial institution would require little collateral as the methods and systems of the disclosure are designed to recognize offsetting positions and early detect any hedging mismatches.

Claims

1. An apparatus comprising:

at least one processor; and

at least one memory storing computer executable instructions that, when executed, cause the apparatus at least to;

provide structured finance products under one or more potential seeding structures, the one or more potential seeding structures including;

a seeding investment agreement between an asset manager and a financial institution for establishing a mutual investment fund by the asset manager;

a prepayment amount invested by the financial institution into the mutual investment fund; and

a return on the seeding investment agreement based on a cash flow from the mutual investment fund, wherein the cash flow is a sum of a price differential and the prepayment amount and wherein the price differential is defined as N×

[(Pt−

Pt−

1)/Pt−

1] with N equal to the prepayment amount and added capital, Pt equal to a closing level of an index at a relevant valuation date, and Pt−

1 equal the closing level of the index at a pre-determined valuation date; and

monitor one or more a plurality of transactions or investments under the one or more potential seeding structures,

generate reports for the one or more potential seeding structures, and track and analyze trading risks associated with the one or more potential seeding structures to monitor trading risk over time.

2. The apparatus of claim 1, wherein the cash flow is a predetermined percentage spread over a predetermined rate.

3. The apparatus of claim 1, wherein the cash flow is a product of the prepayment amount and a predetermined percentage.

4. The apparatus of claim 1, wherein the seeding investment agreement has a term of 6-12 months.

5. The apparatus of claim 1, wherein the seeding investment agreement includes a minimum collateral that includes the mutual investment fund.

6. The apparatus of claim 1, wherein the mutual investment fund is a fund governed by the United States'"'"' Investment Company Act of 1940.

7. The apparatus of claim 1, wherein the mutual investment fund is a fund governed by the European Union'"'"'s Undertakings for Collective Investment in Transferable Securities (“

UCITS”

).

8. A non-transitory computer-readable medium having stored thereon instructions that, when executed, direct a processer to:

provide structured finance products under one or more potential seeding structures;

monitor the transactions or investments under the one or more potential seeding structures;

generate reports for the one or more potential seeding structures; and

track and analyze trading risks associated with the one or more potential seeding structures to monitor the trading risks over time,

the one or more potential seeding structures including at least one of;

a first seeding structure having a seeding investment agreement between a financial institution and an asset manager for seeding a mutual investment fund managed by the asset manager, a purchase of a percentage of equity in the mutual investment fund via an offshore entity associated with the financial institution, and a trade execution of the mutual investment fund; and

a second seeding structure having a seeding investment agreement between an asset manager and a financial institution for establishing a mutual investment fund by the asset manager, a prepayment amount invested by the financial institution into the mutual investment fund, and a return on the seeding investment agreement based on a cash flow from the mutual investment fund, wherein the cash flow is a sum of a price differential and the prepayment amount and wherein the price differential is defined as N×

[(Pt−

Pt−

1)/Pt−

1] with N equal to the prepayment amount and added capital, Pt equal to a closing level of an index at a relevant valuation date, and Pt−

1 equal the closing level of the index at a pre-determined valuation date.

9. The non-transitory computer-readable medium of claim 8, wherein the seeding investment agreement has a term of 6-12 months.

10. The non-transitory computer-readable medium of claim 8, wherein the mutual investment fund is a fund governed by the United States'"'"' Investment Company Act of 1940.

11. The non-transitory computer-readable medium of claim 8, wherein the mutual investment fund is a fund governed by the European Union'"'"'s Undertakings for Collective Investment in Transferable Securities (“

UCITS”

).

12. The non-transitory computer-readable medium of claim 8, further including:

act as an execution broker for the mutual investment fund.